Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Harrison Co. expects to sell 250,000 units of its product next year, which would generate total sales of $22,500,000. Management predicts that pretax net income

image text in transcribed
image text in transcribed
image text in transcribed
image text in transcribed
Harrison Co. expects to sell 250,000 units of its product next year, which would generate total sales of $22,500,000. Management predicts that pretax net income for next year will be $1,300,000 and that the contribution margin per unit will be $20. Complete the below table to calculate the next year's total expected variable costs and fixed costs. HARRISON CO. Forecasted Contribution Margin Income Statement Units S per unit 250,000 Contribution margin $ 20 Required information [The following information applies to the questions displayed below.) Hudson Co. reports the contribution margin income statement for 2019. HUDSON Co. Contribution Margin Income Statement For Year Ended December 31, 2019 Sales (10,900 units at $225 each) Variable costs (10,900 units at $180 each) Contribution margin Fixed costs Pretax income $2,452,500 1,962,000 490,500 387,000 $ 103,500 1. Compute Hudson Co.'s break-even point in units. 2. Compute Hudson Co.'s break-even point in sales dollars. 1. units Break-even point Break-even point 2. Required information [The following information applies to the questions displayed below.) Hudson Co. reports the contribution margin income statement for 2019. HUDSON Co. Contribution Margin Income Statement For Year Ended December 31, 2019 Sales (10,900 units at $225, each) Variable costs (10,900 units at $180 each) Contribution margin Fixed costs Pretax income $2,452,500 1,962,000 490, 500 387,000 $ 103,500 es 1. Assume Hudson Co. has a target pretax income of $159,000 for 2020. What amount of sales (in dollars) is needed to produce this target Income? 2. If Hudson achieves its target pretax income for 2020, what is its margin of safety (in percent)? (Round your answer to 1 decimal place.) 1. Amount of sales 2. Margin of safety % Required information (The following information applies to the questions displayed below.) Hudson Co. reports the contribution margin income statement for 2019. HUDSON CO. Contribution Margin Income Statement For Year Ended December 31, 2019 Sales (10,900 units at $225 each) Variable costs (10,900 units at $180 each) Contribution margin Fixed costs Pretax income $2,452,500 1,962,000 490,500 387,000 $ 103,500 Assume the company is considering investing in a new machine that will increase its fixed costs by $39,000 per year and decrease its variable costs by $10 per unit. Prepare a forecasted contribution margin income statement for 2020 assuming the company purchases this machine. HUDSON CO Forecasted Contribution Margin Income Statement For Year Ended December 31, 2020 Sales Variable costs Contribution margin Fixed costs Income (pretax)/Loss Should the company purchase the machine

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image_2

Step: 3

blur-text-image_3

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Financial Accounting For MBAs

Authors: Peter Easton, Robert Halsey, Mary Lea McAnally, John Wild

8th Edition

1618533584, 9781618533586

More Books

Students also viewed these Accounting questions

Question

Explain the various employee benefit laws.

Answered: 1 week ago

Question

Describe the premium pay benefit practice.

Answered: 1 week ago